Product category:
Mortgages / Housing
News Release from: Motley Fool | Subject: Mortgages
Edited by the Insidemoneytalk Editorial
Team on 11 January 2008
House price fall entices eager
homebuyers
One in ten buyers bring forward plans to buy a property as Fool.co.uk predicts house price falls
One in ten people (11%) who intend to buy a house have brought forward their plans Fool.co.uk predicts the average house price will fall 20% to £157,000 in 2008
This article was originally published on Insidemoneytalk on 27 Mar 2007 at 8.00am (UK)
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There will be five sellers for every four home buyers over the next five years.
A survey [1] by leading independent personal finance information site Fool.co.uk reveals that one in ten people (11%) who plan to buy a house have accelerated their house-moving plans.
Of the people who intend to buy a house, three in eight (38%) plan to do so this year, and one in three (34%) expect to move in 2009.
Further reading
Fool.co.uk highlights the danger thresholds for borrowers
It has often been assumed that only people with adverse credit histories, recent first-time buyers and some buy-to-let investors are at risk in a credit crunch.
Fool.co.uk urges homeowners not to look to the Bank of England for guidance
David Kuo, Head of Personal Finance at Fool.co.uk, says,
The survey, which is part of a wider report entitled Your Finances in 2012[2], also highlights that there will be more sellers than buyers over the next five years.
For every four people who want to buy a house, there will be five sellers.
Meanwhile, one in two people (56%) who plan to buy a home in the next five years say their plans are not affected by predictions of large price drops.
Almost eight out of ten people (86%) who hope to sell their homes in the next five years are not changing those plans on the strength of the long-awaited crash prediction.
Since 1952 house prices have grown between 8% and 9% a year [3], [4].
But growth jumped noticeably after the turn of the Millennium.
Between 2000 and 2007 house prices climbed 13% a year - a typical house that was valued at £85,005 in 2000 soared to £198,898 in 2007.
However, linear regression analysis of house-price data suggests that house prices could radically correct in 2008.
It is estimated that the value of a typical home could fall a fifth (20%) to £157,290 in 2008.
That said, house-price growth should revert to the long-term rate of between 8% and 9% after that.
David Kuo, Head of Personal Finance at Fool.co.uk, says: "The long-overdue correction in the property market will allow many people who have been waiting to move house to finally realize their dream.
"Quite often people will ask how much they can borrow when they want to buy a property.
But that is altogether the wrong question.
Instead, they should ask themselves how much they can afford to repay.
"It is also worth remembering that no one ever rings a bell at the top or the bottom of the property market.
So, home buyers should not be unduly concerned about getting the timing right.
"Instead it is more important to get the correct mortgage and to ensure that you can afford to maintain payments if interest rates rise.
Only then can you be sure that your home-owning dream does not turn into a wealth-destroying nightmare." [1] Fool.co.uk survey of 1,291 research-panel members: What do the next five years hold? (14 December 2007) [2} Fool.co.uk report: Your Finances in 2012 [3] Halifax: National Index October 2007 (8 November 2007) [4] Nationwide house price forecast 2008 (16 November 2007).
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